Sprint - Nextel 2012 Annual Report Download - page 170

CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DISH Proposal
After signing the Merger Agreement, Clearwire received an unsolicited, non
- binding proposal, which we refer to as the DISH Proposal, from
DISH. The DISH Proposal provides for DISH to purchase certain spectrum assets from Clearwire, enter into a commercial agreement with Clearwire and
acquire up to all of Clearwire's common stock for
$3.30 per share (subject to minimum ownership of at least 25% and granting of certain governance
rights) and provide Clearwire with financing on specified terms. The DISH Proposal is only a preliminary indication of interest and is subject to
numerous, material uncertainties and conditions, including the negotiation of multiple contractual arrangements being requested by DISH as well as
regulatory approvals. The DISH Proposal provides that it would be withdrawn if we draw any of funds available under the Note Purchase Agreement.
Some of the terms in the DISH Proposal, as currently proposed, may not be permitted under the terms of Clearwire's current legal and contractual
obligations. Additionally, our ability to enter into strategic transactions is significantly limited by our current contractual arrangements, including the
agreements with Sprint executed on December 17, 2012, which we refer to as the Sprint Agreement, and our existing equityholders' agreement dated
November 28, 2008 as amended on December 8, 2010, which we refer to as the Equityholders
’ Agreement.
The Special Committee is currently evaluating the DISH Proposal and engaging in discussions with each of DISH and Sprint, as appropriate. The
Special Committee has not made any determination to change its recommendation of the current Sprint transaction. Consistent with our obligations
under the Sprint Agreement, we provided Sprint with notice, and the material terms, of the DISH Proposal, and received a response from Sprint that
stated, among other things, that Sprint has reviewed the DISH Proposal and believes that it is illusory, inferior to the Sprint transaction and not viable
because it cannot be implemented in light of our current legal and contractual obligations. Sprint has stated that the Sprint Agreement would prohibit
us from entering into agreements for much of the DISH Proposal.
Liquidity
To date, we have invested heavily in building and maintaining our networks. We have a history of operating losses, and we expect to have
significant losses in the future. We do not expect our operations to generate cumulative positive cash flows during the next twelve months.
As of December 31, 2012, we had available cash and short
- term investments of approximately $868.6 million . Our current LTE build plan is to have
approximately
2,000 LTE sites on air by the end of June 2013, which will satisfy the initial LTE prepayment milestone under the terms of our recently
amended agreements with Sprint. Under the amended wholesale agreements with Sprint, we are required to expand our LTE network to 5,000 sites by
June 30, 2014. Subject to the availability of funding under the Note Purchase Agreement, our current LTE build plans is to expand our LTE network to
5,000 sites by the end of 2013.
Under our current LTE build plan, we currently expect to satisfy our operating, financing and capital spending needs for the next twelve months
using the available cash and short
- term investments on hand together with a portion of the remaining borrowing capacity available under the Note
Purchase Agreement and with the proceeds of additional vendor financing. As discussed previously, our election to forego the first two draws under
the Note Purchase Agreement has reduced the aggregate principal amount available to
$640 million and our ability to draw a portion of the funds under
the Note Purchase Agreement is subject to certain conditions. Additionally, on the last three Draw Dates (in August, September and October 2013), we
can only request that Sprint purchase notes if (i) the Build
- Out Agreement has been reached by February 28, 2013, (ii) the Build - Out Agreement is in
full force and effect and (iii) we have not breached any of our obligations under the Build - Out Agreement.
By electing to draw on at least three months of borrowing capacity under the Note Purchase Agreement, we would have sufficient cash and
borrowing capacity to satisfy the initial LTE prepayment milestone and meet out operating and financing needs for the next twelve months. If the
Merger Agreement were to terminate and funding beyond three draws under the Note Purchase Agreement would no longer be available to the
Company, without alternative sources of additional capital, we would have to significantly curtail our LTE network build plan as currently
contemplated to conserve cash and meet our operating and financing obligations during 2013. If we do not draw on at least three months of borrowing
capacity under the Note Purchase Agreement and do not obtain a similar amount of additional financing from alternative sources, we forecast that our
cash and short
- term investments would be depleted sometime in the fourth quarter of 2013.
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